Loup Ventures

About the Author Loup Ventures

At Loup Ventures, research is in our blood. The spirit of our team has always lived on the curiosity to discover new insights that yield investment opportunities. For years we did this on Wall Street, focused on public tech companies. Now we invest in private frontier tech companies, but public companies like Tesla, Nvidia, and others are also meaningful innovators in frontier tech. These public companies are shaping the emergence of AI, robotics, autonomous vehicles, and AR/VR just as much as early stage startups. As a result, we’ve always kept a watchful eye on public market participants to inform our private investment strategy. Gene Munster is a managing partner and co-founder at Loup Ventures. Prior to Loup Ventures, Gene was a managing director and senior research analyst at Piper Jaffray where he covered technology companies including Apple, Amazon, Google and Facebook. During his 21-year tenure, Gene received many acknowledgements including: Top Stock Picker from Forbes, Best on the Street from The Wall Street Journal, and was widely recognized for his work on Apple. Gene holds a bachelor’s degree in finance and entrepreneurship from University of St. Thomas.

A Big Overhang Has Been Removed from Tesla (TSLA) Stock


By Gene Munster

Elon Musk’s quick settlement of Thursday’s SEC lawsuit is the best possible outcome for all involved. The settlement removes what could have been a significant distraction for Tesla (TSLA) and overhang for shares that could have lasted a year. It also creates an opportunity to strengthen Tesla’s board, which we’ve previously advocated.

Settlement Good for All

Elon Musk settled the SEC lawsuit against him. He will pay a $20 million fine and step down as chairman, but remain CEO of Tesla. The settlement makes sense for all parties involved. It’s good for Musk because he can remain CEO of Tesla in this critical period. It’s good for Tesla for the same reason, and now the company can stay focused on production. It’s good for Tesla shareholders, who will benefit from Musk’s continued involvement. It’s good for the SEC, who served the interests of shareholders while maintaining the sanctity of the law. Lastly, it’s good for America. Musk, flaws and all, is arguably the most influential and important entrepreneur of the last decade.

Settlement as an Opportunity

It’s not often that an SEC lawsuit could be viewed as an opportunity, but this is one of those rare cases. There are two key potential outcomes from the lawsuit. First, Musk stepping down as chairman of the board is something we wrote about before. The open board chairperson role creates an opportunity for Tesla to potentially put someone in place that is capable of influencing Musk and helping Tesla reach sustainability. Al Gore, currently on Apple’s board, could be an interesting fit given his interest in climate change. Former Boeing CEO Jim McNerney would also be a good option as the former chairman at the company. Second, the lawsuit could serve as a wakeup call for Musk to tone down some of his public-facing behavior, particularly on Twitter. If Musk can step away from the external stuff that doesn’t matter, he’ll make the game that much easier for himself, and that will be good for everyone, just like this settlement.

 

Disclaimer: We actively write about the themes in which we invest or may invest: virtual reality, augmented reality, artificial intelligence, and robotics. From time to time, we may write about companies that are in our portfolio. As managers of the portfolio, we may earn carried interest, management fees or other compensation from such portfolio.

 

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